Wasteful government spending draws criticism in report

A new report says the federal government has managed to lose between $31 billion and $60 billion to contractor fraud and waste in the wars in Iraq and Afghanistan. That’s a small fraction of the estimated $1.4 trillion the two wars have cost taxpayers.

But it’s still a significant amount of money when you consider what the government has spent on other programs that may have mattered a lot more to the American people than the outcome of the two conflicts on the other side of the globe (in which we continue to spend an estimated $1 billion every three days.)

The numbers come from the bipartisan Commission on Wartime Contracting, which just completed its final report to Congress (to see a copy of the report go to http://www.wartimecontracting.gov/docs/CWC_NR-49.pdf). The report’s authors blame part of the losses on spending cuts that reduced civilian employees in the military in the 1990s.

“The government has known for 20 years that contractors would be a key part of any major response to large or sustained hostilities or major disasters,” said Commission co-chairman Michael Thibault. “Yet the government was not prepared to go into Afghanistan in 2001 or Iraq in 2003 using large numbers of contractors and is still unable to provide effective management and oversight of contract spending that will have exceeded $206 billion by the end of September.”

The Commission’s report reads like a “how-not-to” manual on providing support for the hundreds of thousands of American and NATO soldiers who have passed through Afghanistan since 2001 and Iraq since 2003.

Among the findings: the U.S. Agency for International Development paid $92 million to the accounting firm Deloitte to train executives of the Afghanistan Central Bank, which oversaw the Kabul Bank, Afghanistan’s largest private bank. According to reports, the Kabul Bank had an estimated $900 million in assets loaded with worthless loans. The bank collapsed in 2010, putting the Afghan financial system into freefall. “USAID staff learned of serious bank problems from reading about them in the Washington Post. Deloitte never notified the agency,” the contracting commission reported.

It also details numerous other incidents in which the government paid local contractors millions for construction projects or project security. Several of those projects, such as a 64-mile highway or base housing for military personnel, are now falling apart due to poor workmanship or substandard materials. That or the contractors proved to have been working for the insurgents.

In contrast, the federal government has spent only a fraction of those amounts providing a safety net for producers who provide much of the food, feed, fiber and now fuel to U.S. consumers. The payments to producers have been accompanied with little fraud and less waste when you consider how much American’s pay for food (about 11 percent of annual income.)

So the next time someone starts criticizing farmers for receiving “corporate welfare” payments remind them of the billions of dollars the government has wasted overseas in much less fertile fields.